Market Outlook - The current December is viewed as the Santa Claus rally, with expectations for a broadening market in 2026, indicating a rotation from high-performing sectors to those that have underperformed [2][6] - The market is anticipated to shift towards value and dividend stocks, as well as small-cap stocks, rather than continuing to favor mega-cap tech stocks [6] Sector Performance - Dividend and value stocks, represented by ETFs like the S&P Spider 500 high dividend ETF and Schwab large cap value ETF, have underperformed the S&P 500 this month, despite expectations for a potential catch-up in performance [3][5] - Consumer staples and discretionary sectors, along with energy, are highlighted as areas that have not performed well but may present interesting opportunities due to lower valuations [5] Commodities Market - The metals market, particularly gold and silver, is viewed as having peaked, with the best performance in nearly 50 years, suggesting that current investments in these commodities may be chasing momentum rather than value [8] - The recommendation is to take profits in gold and silver rather than investing new capital [9] Technology Sector - The tech sector is expected to remain positive, but growth may not be as robust as in previous years, with a notable rotation among the MAG 7 stocks, where five have underperformed the S&P 500 [10][11] - Companies like Meta and Microsoft are anticipated to perform better in the upcoming year, while Google is expected to see less impressive growth compared to this year [11][12]

Core Viewpoint - The small cap market is showing signs of a potential breakout, with the S&P 600 index nearing its all-time highs, indicating possible upside for small cap investments [2]. Small Cap Performance - The Russell 2000 index achieved new all-time highs in September, but the S&P 600, which includes a profitability component, struggled until recently [2]. - Small caps are currently at levels similar to those seen four years ago in November 2021, suggesting that if the recent breakout holds, there could be significant upside potential [2]. Market Dynamics - There is a noted relative weakness in some of the MAG 7 stocks, particularly Nvidia and Meta, which may impact overall market performance [3][6]. - The ratio of small caps to MAG 7 stocks is beginning to break out of a multi-year downtrend that started in 2022-2023, indicating a shift in market dynamics [3]. Future Outlook - Despite the relative underperformance of MAG 7 stocks, there is still potential for small caps to perform well as long as other market segments continue to participate positively [5]. - The current pullbacks in major stocks like Nvidia and Meta could signal a trend change, particularly for Meta, which is showing signs of weakness [6].

Economic Outlook - The Federal Reserve cuts rates to lower funding costs for the banking system, aiming to stimulate lending and economic growth [2] - There is a concern about the current state of the financial sector and its impact on lending and growth, with no clear hiccup identified [3] - The K-shaped economy is highlighted, where high rates make borrowing expensive for broader consumers, while the strong stock market benefits a select few [4] Lending and Financing - Lowering rates may not encourage lending to riskier entities, as lenders may keep rates the same despite lower funding costs [5] - The fiscal side of the economy is more critical than the monetary side, especially in light of the deficit [6] - There are concerns about the ability of businesses relying on corporate bond markets to secure financing for mergers [7] Inflation and Capital Allocation - Lowering rates without addressing financial sector issues could lead to inflation and misallocation of capital [8] - The K-shaped economy suggests that investment may not be directed where it is most needed, indicating that fiscal policy rather than monetary policy should address these issues [9] Market Perspectives - There is a debate about market outlooks, with some analysts projecting bullish price targets for the next year, while others suggest a focus on more stable, less speculative investments [10] - The theme of "boring is beautiful" is proposed, emphasizing the value of dividends and stable investments over speculative stocks [11] - Non-US quality stocks are identified as undervalued, with growth rates surpassing those of major US stocks [13]

Joining me now to discuss Ashley McNeel, Vista Equity Partners, head of equity capital markets. Welcome back. >> Thank you.>> It's such a good time to have you because there are so many different opinions about this whole AI bubble or not. Um you say that you remain quote responsibly bullish on the market. So what does that mean.Respon like friends don't let friends buy AI stocks at these levels. Like what is that. >> Yeah.No, it means being measured about your approach recognizing that yeah, we're probably ...

Core Viewpoint - The options market is experiencing increased bullish activity, particularly following the recent Federal Reserve meeting, with a notable rise in single stock options trading, especially in AI-related stocks and small caps [2][4]. Options Market Activity - A record 54 million single stock options contracts were traded, predominantly from the call side, indicating a strong bullish sentiment [2]. - The percentage of large-cap names trading with inverted call skew rose from 3% to 12% in just one week, suggesting heightened demand for upside calls [4]. - There is a decline in hedging demand, as evidenced by the cost of puts, indicating that investors are more focused on seeking upside potential rather than protecting positions [6]. Sector Rotation and Market Sentiment - A significant sector rotation was observed, moving away from defensive sectors towards cyclical sectors, reflecting a risk-on sentiment in the market [7]. - The options market indicates bullishness in equities, while the bond market is pricing in higher inflation, suggesting a complex market environment [7]. Economic Outlook - There is skepticism about whether the markets are signaling a growth environment, as both the bond and stock markets may be misinterpreting the Federal Reserve's focus, potentially leading to vulnerabilities in the weeks ahead [8]. - The underlying economic conditions, including inflation and labor market data, are critical factors to monitor, as they could impact market stability [8].

Let's do some final trades here on a pretty big day for stocks. Josh Brown, I mentioned rocket on Tuesday as my final trade. The stock has officially broken out.New 52- week high. Staying long. It looks great.Jimmy did this just just to put his thumb in my eye. That has nothing to do with you. The stock market's getting it wrong on Delta Airlines.Sirat agrees with me. You know, there's always a I feel like there's mot extra motivation to this. Do you What do you think, Sat.Listen, I think it's the best run ...